Right-wing Cabinet member is OK'd by Israeli Knesset curfews are eased WAR IN THE GULF

JERUSALEM -- With bombs and votes, Israel's government made clear yesterday that its restraint in the Persian Gulf war has not softened its hard-line attitude toward Palestinians. However, it did begin easing the curfew under which the occupied territories have lived since the war broke out.

The Knesset, Israel's parliament, voted last night to include in the Cabinet a controversial right-winger who advocates emptying the occupied territories of 1.7 million Palestinians and who has called for immediate retaliation against Iraq.

Earlier in the day, Israeli jets mounted a fierce bombing raid on seven Palestinian refugee camps in southern Lebanon in further retaliation for rocket attacks from there last week by the Palestine Liberation Organization. Initial reports said seven Palestinians were killed and 25 wounded in the attack, said to be the largest by Israel since its 1982 invasion of Lebanon.

In Jerusalem, police announced a sweep of 10 Israeli Arabs arrested on suspicion of spying, and government officials stepped up their campaign to discredit the Palestinian leadership.

At every opportunity, government officials sought to link Palestinians and the PLO to Iraqi President Saddam Hussein, to capitalize on anti-Iraq sentiment.

The verbal attack was led by Prime Minister Yitzhak Shamir. In a speech to the Knesset Monday, he bluntly denounced the possibility of an international conference to deal with the Palestinian question.

Such a conference "is fervently supported by Saddam Hussein and Yasser Arafat," he said. "Israel will have no part in such a conference."

Mr. Shamir had shocked even some in his own party by inviting into the Cabinet last week a fringe right-wing party headed by former Gen. Rehavam Ze'evi.

Opponents to the appointment stalked out of the Knesset after the 61-54 vote, as Mr. Ze'evi was being sworn as a minister without portfolio. They called him a racist.

Mohammed Miari, an Israeli Arab Knesset member, said in the debate that Mr. Ze'evi's policies would mean "a new Holocaust" if adopted.

Mr. Ze'evi favors a policy of "transfer," which envisions moving the Palestinians out of the West Bank and Gaza Strip and annexing the areas as part of Israel.

During a parliamentary debate in 1989, he shouted at an Arab Knesset member, "Every Jew is worth 1,000 Arabs."

The opposition had recoiled at his inclusion in the Cabinet, as had some of Mr. Shamir's own Likud bloc. Likud member Benjamin Begin called it "moral contamination."

"This increases the power of the hard-liners," said liberal Knesset member Amnon Rubinstein. "It is repugnant." He noted that the political harmony Mr. Shamir had enjoyed since the outbreak of the war was "destroyed in one fell swoop."

Israel began yesterday what it called a stage-by-stage lifting of the curfew it imposed on the occupied territories when the war broke out.

The army said the curfew had been lifted in the West Bank towns of Bethlehem, Jericho, Kalkilya and at least during the day in Ramallah and Hebron. In the Gaza Strip, it was lifted in Beit Hanoun, Beit Lahiya, Bani Suheila and several other rural areas.